The day before the Bureau of Labor Statistics posted slowing April 2024 inflation in the U.S. Fed Chair Jerome Powell reiterated his interest rate policy. He said that rates need not change for now. The economy needs to let current Fed Fund Rate levels of over 5% slow inflation.
Markets dismissed Powell by bidding the Dow Jones above 40,000, albeit briefly.
On Thursday, Fed’s Loretta Mester said the central bank will gather more evidence on how the economy is evolving. Fed watchers may underestimate the impact of excessive fiscal spending. Monetary policy would need to work harder and at higher rates to offset the government’s stimulus spending.
Stock markets accumulated positions in sectors that benefit from high government spending. Gold, copper, and silver prices trade at fresh 52-week highs. The market expects demand for base metals and resources to increase as economic growth continues.
Investors should watch SPDR Gold Shares ETF (GLD), which has a bearish double top at $220.03. Gold prices risk falling, which would suggest that the market expects inflation rates to indeed fall. The iShares Silver Trust (SLV) closed near its $27.24 high on Thursday. It needs increased buying volume to continue the uptrend.
The energy sector continues to struggle. VanEck Oil Services ETF (OIH) is at risk of breaking down. It needs higher oil demand and a decrease in output from OPEC+ to re-take the $364.08 high.
Related Stories
